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Income Protection Plans
How do income protection plans work?
Income protection plans are normally referred to as Permanent Health
Insurance (PHI) Permanent Health Insurance (PHI) is designed to
provide a replacement tax free income if the unexpected happens
and you succumb to long-term sickness or disability caused by illness
or accident. Benefit levels of income protection plans are chosen
with a view to maintaining your current standard of living and making
repayments on outstanding loans or debts, including your mortgage.
How much cover can an income protection plan provide?
The amount of benefit you can be covered for by an income protection
plan is normally determined by your salary. Normally up to 65% of
your current earnings can be replaced by an income protection policy,
although any income from State benefits, pensions or other sources
will often be taken in to account when benefit levels are calculated.
Cover can also be obtained if you are not working, and the amount
available will vary from company to company.
How much will it cost?
Premiums on income protection plans vary depending on age, sex,
occupation, tobacco consumption and amount of benefit required.
The term and deferred period of the income protection plan will
also cause variations in premiums. A male non-smoker age 30, in
an office based job, requiring £6000 per annum tax free benefit
to age 60, deferred for 3 months could pay as little as £2.50
per week.* … *Source:
Common Trading Platform Jan. 2000
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